Government tightlipped on companies to sign new PSA for offshore oil blocks

Moments after he declared that the Government has “nothing to hide” with regards to the management of the Petroleum Sector, Minister of Natural Resources, Vickram Bharrat on Friday declined to provide the Parliamentary Committee of Supply with the names of the four companies that are expected to sign the new Production Sharing Agreement (PSA) for four of the country’s lucrative offshore oil blocks.

As he was pressed for answers by APNU+AFC Member of Parliament, David Patterson, the Natural Resources Minister said when the time is right, the announcement will be made by the Government.

In the past, the Natural Resources Ministry had indicated that TotalEnergies Consortium, the International Group Investment Inc, Cybele Energy Limited and Delcorp Inc had all accepted the new Production Sharing Agreement, and were expected to sign off on the agreement.

But as he dodged questions during his appearance before the Committee of Supply, the Natural Resources Minister said when compared to the Stabroek Block 2016 PSA, the new agreements for both the Deep Water and Shallow Water Blocks, would return greater benefits to the people of Guyana.

“One of the fiscal terms that have been included in the new PSA, is instead of zero percent tax in the Stabroek PSA, every other PSA moving forward would have 10% tax. Mr. Speaker, instead of 2% royalty in the Stabroek PSA, we will now have 10% royalty in any future PSAs. Mr Speaker instead of 75% cost recovery in the Stabroek Block, we will then have a 65% cost recovery. And what that means, it simply means more money up front for Guyana, while we are still paying off the cost bank or the capital investments by the companies investing,” Minister Bharrat boasted.

Government, he added, has retained the 50-50 profit-sharing after cost recovery.

Outside of the fiscal terms, the Natural Resources Minister said the PSAs outline strict timelines, if breach can see operators paying hefty fees.

“We have ensured that work programmes are adhered to and if the work programmes are not adhered to, there is a penalty whereby the operator or the companies must play at least half of the amount of money that was allocated towards that work programme,” he explained.

Minister Bharrat said while he has taken note of a commitment by the opposition to review the controversial 2016 Stabroek Block PSA signed with ExxonMobil, the Government remains firm in its position that it will not renegotiate the contract. He said Government has opted to craft the new PSAs that would govern future blocks.

“We have made it clear that we are not going to renegotiate the Stabroek contract. We have made it very clear that we are not going to renegotiate the Stabroek contract but we are going to develop a model PSA that will bring additional benefits to any other PSA that will be signed with any other company including ExxonMobil, including ExxonMobil,” the Natural Resources Minister said.

This year marks two years since the Government placed 14 of the country’s offshore oil blocks up for auction.

In late 2023, one year after the auction was launched, the Government awarded eight of the blocks to a total of six bidders – TotalEnergies Consortium, which includes Qatar Energy and Petronas; Sispro Inc.; International Group Investment Inc. and Montego Energy; Liberty Petroleum Corporation and Cybele Energy; ExxonMobil, Hess and CNOOC; and Delcorp Inc, Watad Energy and Arabian Drillers.

However, it is still to issue any license.